Responses to Holland's Letter to the SOA
David Holland, President of the SOA, was kind enough to respond to "Cassandra of the CAS," laying to rest the uncertainties in that column. In his June 4, 1997, letter to all members of the SOA, Mr. Holland writes in regard to life and casualty topics: "if we are not able to provide this material through jointly sponsored examinations, we will be forced to seek other alternatives."
Yes, the SOA will soon be offering casualty exams, as part of a unified syllabus covering all parts of actuarial education. This makes sense, of course. The SOA syllabus already has separate tracks for five different practice areas: individual life and annuities, pension, group and health benefits, finance, and investments. SOA candidates choose a track, much as college students choose a major; there is no expectation that every new actuary be an expert in all of these fields. Adding a "property and casualty" track would strengthen this educational system.
Cassandra thought that the slow but inexorable movement of economic forces would propel the incorporation of a casualty track into the SOA syllabus. That is not all, corrects Mr. Holland. International actuarial education requirements, which will "require that actuarial education cover both life and casualty topics" may have a far swifter effect, since it is "inconceivable that the SOA will have an education syllabus which is not in compliance with IFAA requirements."
Some voices on the casualty side cry foul, alleging duplicity on Mr. Holland's part. Has the SOA not vouchsafed to us that they deal with life contingencies, while the CAS is the casualty organization? Is there not an eternal covenant between us that they sponsor the life actuarial exams and that we sponsor the casualty actuarial examinations?
On the contrary: the SOA leadership has moved boldly, rapidly, and openly to further the interests of their members. They have co-opted the pension actuarial society into the SOA, they have expanded into finance and investment areas, they have set up scores of test centers in foreign countries. Each expansion has been discussed widely throughout their organization, often preceded by "white papers" outlining these initiatives.
The expansion into the casualty field is equally open, equally rapid, and equally bold. Life actuaries with interest in these matters discuss them freely and honestly. (Most life actuaries, of course, have little concern with casualty issues.) The conversion of the Transactions of the SOA, a journal focused on life contingencies, to the more encompassing NAAJ, which deals equally with life, casualty, health, pension, and investment topics, is the natural counterpart to this transition. That some members of the CAS recoil in shock at this development elicits only a smile on the SOA countenance.
How different it is on the CAS side! "Hush, Sholom," I was told, "lest our membership get wind of what is happening. You must not let Cassandra appear in the AR."
Cassandra is but one voice in a large debate. CAS members must decide: do we wish to be one practice area within a larger actuarial society, or do we wish to remain an independent organization? The CAS has listed "independence" as a key priority in its strategic plan. One hears various views among our membership about what independence entails, and how we ought to ensure our independence. These voices must not be muted; we must listen to them thoughtfully.
Sholom Feldblum, FCAS, ASA
Dear Mr. Holland:
This is in response to your June 4, 1997 letter to the SOA membership regarding "our" relationship with the Casualty Actuarial Society, and specifically "our" reaction to Stan Khury's editorial in the May, 1997 issue of the AR.
You state in your letter that "there is casualty expertise on the editorial board of the NAAJ." While it is true that Professor Hickman is an ACAS, although his CAS credentials are not noted in the NAAJ, it is not clear that he is qualified to issue Public Statements of Actuarial Opinion on casualty topics under the AAA Qualification Standards. Given the fact that there are over 100 SOA members who are also members of the CAS, it would seem that your confidence that "our review process will meet the highest professional standards" places a great responsibility on a single ACAS.
The SOA publication Directory of Actuarial Memberships describes the SOA as "an international research, education and membership organization for actuaries in the life and health insurance, employment benefits, and pension fields." This same SOA publication identifies the CAS as "an international research, education and membership organization for actuaries in the property and casualty insurance, workers' compensation and liability coverage fields." This distinction is recognized by the AAA as well in its Qualification Standards.
Yet the Mission Statement of the SOA describes its members as actuaries who "currently practice primarily in the areas of life insurance, health and retirement systems and investments..." (emphasis added). Remembering advice once given me to the effect that "you can be paranoid and still have someone out to get you" this strange choice of wording in conjunction with the scope of the NAAJ certainly produces the appearance of an organization intent upon expanding its horizons into an area which I believe is already being ably served by the CAS.
While I share your belief that all actuaries should have exposure to life, health and casualty topics, if only to understand when a specialist from another discipline should be called in, my concern is that exposure to casualty topics may be viewed by some as the equivalent of an education in casualty actuarial science. The educational value of CAS membership is generally well recognized by the insurance and reinsurance industries, as evidenced by the number of CAS members who have been recruited to work in the U.K. But the public is not so knowledgeable. If a member of the SOA holds him or herself out as qualified in the field of casualty actuarial science, can the SOA be depended upon to protect the public? Or will casualty actuarial science be viewed by the SOA as a natural extension of basic actuarial principles?
You are correct when you state that "there is more to gain by cooperation than confrontation." But cooperation cannot be at the expense of professionalism. The purposes of the CAS "are to advance the body of knowledge of actuarial science applied to property, casualty and similar risk exposures, to establish and maintain standards of qualification for membership, to promote and maintain high standards of conduct and competence for the members, and to increase the awareness of actuarial science." What you seem to be proposing is an educational structure in which actuaries are inadequately grounded in the basics of both life and casualty actuarial science. While this may well evidence a cooperative spirit among the learned societies, it will not produce better actuaries.
To view the Khury editorial and the Feldblum article as the "CAS leadership's declaration of independence" is, I believe, a grave error. Our declaration of independence was in 1914. Just as Great Britain failed to recognize the value of its colonies, the American actuarial organizations failed to appreciate the future of the property and casualty business. While I believe the CAS and SOA can be noble allies, the "fence" you believe the CAS to be building is actually a solid wall which has been erected brick by brick over the past 83 years and is held together by the mortar of education, experience, and dedication to casualty actuarial science.
Charles L. McClenahan, FCAS, ASA, MAAA